New numbers show a near-total collapse in the number of Metro Vancouver homes bought by foreign nationals in August after B.C.’s new 15 per cent foreign buyer tax kicked in.
Just 60 transactions with foreigners were recorded in Metro in August – 0.9 per cent of the total – down from 1,974 or 13.2 per cent in the previous seven weeks.
The new numbers were released Thursday by the finance ministry.
The value of foreign deals in Metro plunged from $2.3 billion for the seven weeks prior to the new tax taking effect to less than $47 million in August.
Premier Christy Clark noted a huge surge of transactions were rushed through in late July – $850 million worth involving foreigners on July 29 alone – so they’d close before Aug. 2 and not be subject to the new tax.
“Lots of people moved their transactions into July from August because they wanted to avoid paying the tax,” Clark told reporters. “So I think we’ll start to see the numbers change a little bit in the coming months.”
Clark said the apparent dramatic effect of the tax was the goal of government in setting a rate for foreign buyers that some people argued was too high.
“That is the impact we wanted to have,” she said. “My hope is that many of those units that might have otherwise sold to foreign buyers will be open for British Columbians to buy, because we want to put British Columbians first.”
Clark also said she expected the tax would face a legal challenge. A Chinese student who was hit with an $80,000 foreign buyer tax bill on the Langley townhome she bought is leading a proposed class-action lawsuit on behalf of foreign buyers.
In the rest of the province outside Metro Vancouver – where the tax is not levied – there were 189 property transfers by foreigners, or 1.7 per cent of total transfers, worth $109 million. That was down from 3.6 per cent of the transfers in the rest of the province by foreigners prior to Aug. 2.
Foreign buyers made up 3.7 per cent of transactions in August in the Capital Regional District.
Finance Minister Mike de Jong has indicated the province would watch regions outside of Metro to gauge if the foreign buyer tax should be extended to additional areas.
Within Metro, foreign buyers made up 0.9 per cent of August transfers in Vancouver, 1.9 per cent in Richmond, 0.6 per cent in Surrey and 1.0 per cent in Burnaby – down sharply in each case from more than 24 per cent in Burnaby and Richmond before the tax took effect.
The amount of extra tax levied from foreign buyers in August was $2.5 million.
But finance ministry auditors are examining some transactions to see if they were structured to dodge the tax and whether reassessments are necessary. Suspect transactions include ones where a foreign buyer and a Canadian citizen or permanent resident were both included on title, with the extra tax only owed on the portion of the value claimed by the foreigner.
The province is also checking the citizenship of buyers who claimed to be tax-exempt Canadians or permanent residents and has vowed to audit any anomalies or cases where social insurance numbers don’t match.
The finance ministry has estimated it would generate $165 million a year in new revenue, which the province intends to use to fund new affordable housing initiatives.